Increase in money supply

In August, money (made up of notes and coins) increased by N399.5 million or 3.4 per cent toN12.3 billion.
This compared with the increase with of 27.0 million or 0.6 per cent and N663.4 million or 5.6 per cent in the previous months in August 1986, respectively.
According to reports on the level at end – December 1986, notes and coins in circulation fell by N445.6 million or 3.5 per cent.
The money expansionary factor of money supply during the month was the substantial increase of N1.1 billion in foreign assets (net) of banking system. The expansionary impact of this factor was partially offset by the contractionary effects of the decine of N27.5 million in in net bank credit to the domestic economy and N381.4 million in “other assets (net) of the banking system as well as the rise of N270.8 million in quasi-money.
The rise was reflected wholly in the demand deposit component of the money supplied. As a result the demand deposit ratio rose from 57.2 per cent in the previous month to 59.1 per cent at end August.
Following increases in money supply and quasi money, the broad money, (including demand deposits, savings and holdings of financial intermediaries) rose by N670.3 million or 2.7 per cent to N25.3 billion, compared with N266.7 million or 1.1 per cent in the preceding months and N583.5 million or 2.3 per cent in the corresponding months in 1986. Over he level at end December1986, money supply rose by N1.1 million or 4.5 per cent.